Positive signs for recovering Sensis

Sensis recorded encouraging digital growth during the second half of the financial year but still has a long way to go before this offsets the terminal decline in its print directories.

Telstra
’s advertising and directories division posted a 6.4 per cent drop in full-year revenue to $1.78 billion yesterday. Earnings before interest, tax depreciation and amortisation fell more sharply by 9.3 per cent to $994 million.

This was driven predominantly by the continued decline of its Yellow Pages directories as businesses increasingly move their advertising from print to online. Yellow Pages print revenue fell by 15.8 per cent during the financial year, which the telco blamed on higher cancellation rates and declining yields.

This was partially offset by improved digital revenue, which grew by 12.8 per cent during the first half having been virtually flat during the previous six months.

This suggests it is gaining traction with customers since unveiling a new digital strategy in March.

But Sensis chief executive
Bruce Akhurst
told an analyst briefing in Melbourne yesterday that it would still be three years before the improvement in its digital business would offset the decline in print revenues.

He has previously predicted mid single-digit revenue and EBITDA declines during the next two financial years. When questioned over whether this was still realistic given the sudden deterioration in consumer confidence, Mr Akhurst pointed out that many of its suppliers provided services that were not discretionary.

“If you are having a wedding and want a marquee, or you need your plumbing fixed, a lot of these things have to happen irrespective of consumer confidence," he said.

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“We are not seeing the small business sector as a whole decreasing its advertising budget."

Telstra chief executive
David Thodey
said Sensis advertising packages that combined print and digital had been well received by the market, which had delivered higher than expected revenue per customer.

While there was still plenty of work to do, he said there were some positive indicators as Sensis worked to convince small and medium businesses it was the right partner to help them make the transition into a digital world.

“The product offering is good but now it’s about execution and that’s going to take time because it’s a really different business model," Mr Thodey said.

He offered a frank assessment in response to an analyst’s question about its future print prospects.

“I don’t think anyone is under any illusions about the print product’s decline," Mr Thodey said.

“We will try to keep it going as long as we possibly can but it’s just the reality and we’ve seen it in every other market around the world."